Colorado Business Insurance

What insurance does my colorado business need?

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Colorado Workers’ Compensation Insurance

Almost all Colorado businesses are required to get and maintain Workers’ Compensation Insurance. According to state Law (§8-40-102), this applies businesses with one or more employees in Colorado and includes anyone who is working for your business, part time employees and family members included.

The cost of this insurance cannot be deducted from employee wages, and failure to obtain Workers’ Compensation can result in some hefty fines from the state. (Up to $500 a day for every day you are not insured and you risk your business being dissolved–Ouch!)

The Colorado Department of Labor and Employment also requires you to display a Notice to Employer of Injury Poster (WC 50) in your place of business at all times, in case of employee injury.

If an employee is injured at work, you will need to:

• Provide a list of designated providers to the injured employee
• Keep a record of any injuries or occupational diseases in your workplace
• Report the employee’s injury to your insurance provider within 10 days of the incident
• File a Supplemental Report of Return to Work form with your insurer when the employee returns to work

In rare cases, some independent contractors (those with no employees) can reject Workers’ Compensation coverage if they meet certain criteria and file a Rejection of Coverage with the Colorado Department of Labor and Employment.

Why is Workers Compensation Insurance required?

While at first it may seem like an unnecessary expense, purchasing Workers’ Compensation Insurance makes sure that you, your business, and your employees have a plan for any potential injuries on the job, should the time come.

Workers’ Compensation covers the employee’s medical care, after care (like physical therapy), and any wages they may have lost when they were injured. It also protects you financially. Here in Colorado, if you fail to obtain Workers’ Compensation Insurance and an employee is injured on the job, not only will you have to pay for the claim yourself, but the state will also fine you an additional 25% of the injured worker’s benefits.

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Unemployment Insurance

In Colorado, most employers are required to pay an unemployment tax to the Colorado Department of Labor and Employment. As a Colorado business owner, you will more than likely have to pay a premium (or premiums) that are then put into the state’s Unemployment Insurance Trust Fund.

Your premium rate is determined annually and depends on a variety of qualifications included, but not limited to, the number of premiums you’ve paid for in previous years and any benefit payments made to former employees. We recommend checking out the CO Department of Labor and Employment website for in-depth information regarding your business’s specific premium rate.

You’ll be required to pay unemployment premiums if you:

1. Paid at least one employee $1,500 or more in a calendar quarter (Can be either during the current or the previous calendar year)
2. Paid one or more employees any day during a 20 week span this calendar year or the previous calendar year

How can I find my Unemployment Insurance premium rate?

Once registered to do business in Colorado, the state will send you an annual notice (usually in December) that will detail what your rate will be for the next calendar year.

When you hire us as your registered agent, we’ll immediately scan, upload, and notify you when you receive important reminders (like this one) from the state. You’ll be able to access and manage all of your important state paperwork in your online account, making it easy to stay on top of state requirements.

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Property Insurance

Property Insurance is not required by the state, but having a policy is a good way to protect your company against losses or damages to the business’s property. This includes company-owned buildings and personal property.

• If you own your place of business: Your policy will include protection against damages to both your company’s commercial property and personal property. For example, say your office was broken into and company property was stolen. Your property insurance policy may cover the damage to your building and the cost of the stolen goods.

• If you rent or lease your place of business: There are still insurance options to protect your business’s property. Most landlords pay to insure their building and property, but often this insurance does not cover the property of their tenants (i.e. you). In order to protect your personal property (like inventory, technology, etc.), you can purchase insurance specifically tailored to renters and lessees.

The specifics of your Property Insurance package will depend on your insurance agency. Most offer a general package the covers typical small business needs, but often commercial insurance agencies let business owners customize their policy so that it better reflects their business’s needs.

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Business Interruption Insurance

Essentially, a Business Interruption Insurance policy will cover continuing expenses, like salaries and mortgage payments, and help you maintain your business presence should an “unexpected event” interrupt your normal means of business. Your insurance provider’s policy will cover the specifics of what’s included in this.

But what counts as an “unexpected event?”

Crime: If an act of crime inhibits your company’s ability to operate, it may be covered by Business Interruption Insurance. For example, someone breaks into your place of business, vandalizing and damaging technology and equipment essential to your operations. This insurance would cover rent, utilities, and other essential operations until your equipment has been replaced and your able to continue conducting business.

Building Repair: A big part of building ownership is being responsible for building upkeep. Having a Business Interruption Insurance Policy may cover the cost of business operations while you repair your building, particularly when removing potential toxins like mold, radon, and asbestos.

Natural Disasters: Colorado is one of the best states to live and do business in. We bought a building in Denver because we love it here. But this state also has its share of natural disasters. Depending on where your business is located, your property could be at risk of damage from a variety of potential disasters, including:

• Flooding (especially for those located close to any of our state’s rivers)
• Wildfires (even if a fire doesn’t touch your property, there’s always the chance of smoke damage)
• Landslides (particularly common after damage from wildfires)
• Severe Storms (especially in the spring and summer months, these storms can produce hail, strong winds, flash floods, and tornadoes)
• Drought (particularly damaging if your business is involved the agricultural industry)
• Earthquakes (though rare, they do happen occasionally in CO)

The extent of the coverage you need (and how much it costs) depends entirely on where your business is located. For example, if you’re located on the east side, along the Front Range and foothills, severe storms and potential tornadoes are probably more of a concern than if you are located in mountains, where the larger risk lies in avalanches and landslides.

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Flood Insurance

You would think that most Property Insurance would include damage caused by flooding, but unfortunately that is not the case. Policies in regards to flood risk are usually separate from general Property Insurance.

Luckily, if flooding is not covered by your Business Interruption Insurance policy (see above) FEMA allows business owners to purchase coverage through the National Flood Insurance Program.

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General Liability Insurance

It’s important for your business to have a general, Business Liability Insurance policy. Why? While your LLC’s liability status keeps your personal assets separate from your business’s, it does not cover the cost of the loss of your business’s assets should someone sue you.

Plus, General Liability Service also protects you and your business if a client suffers injury of damages in your place of business or because of any of the products or services sold. Specifically, policies like this:

• Protect your assets
• Protect your business’s assets
• Cover the cost of defending yourself against the client’s claim

This insurance not only protects you and the business, but also your employees (as long as the incident occurred on or with company property).

What if General Liability Insurance isn’t enough?

Sometimes called “Excess Liability,” these secondary policies can cover the cost of the rest of a claim if said claim has maxed out your General Liability Insurance policy.

For example, your business General Liability Insurance Policy covers $500,000. But after a dispute, a disgruntled client wins a claim of $750,000. An Excess Liability Insurance policy would cover that extra $250,000.

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Professional Liability Insurance

Professional Liability Insurance is reserved for professionals that offer specific services, like medical care and legal representation. In Colorado, both licensed physicians and realtors are required by law to carry Professional Liability Insurance.

Some other professionals, like Architects, Accountants, Engineers, Doctors, Lawyers, and Insurance Brokers, are required by their licensing board to maintain Professional Liability Insurance.

These policies are tailored to the specific risks and liability in a profession, and often cover the costs to defend a professional in court, as well as any damage caused by that professional’s individual actions and/or negligence.